Kenneth D. Krause
Executive Vice President, Chief Financial Officer and Treasurer at Rollins
Thanks Jerry and good morning everyone. The second quarter reflects continued strong execution by the Rollins team. A few highlights to start. We delivered Q2 revenue growth of 8.7% year-over-year, with organic growth of 7.7%, that was at the high end of the 7% to 8% range we discussed in our recent Investor Day, despite having two less business days in June relative to the prior year. Through the first half of the year, the team delivered total revenue growth of 10.9% and solid organic revenue growth of 7.6%.
Incremental EBITDA margins were over 30% for the first half of the year and approached 40% in the second quarter, ahead of the metrics we discussed in our recent Investor Day, driven by strong leverage throughout the P&L. And last but not least, our team delivered operating cash flow of $145 million and free flow of $136 million. Year-to-date, operating cash flow approximates $273 million, and free cash flow approximates $257 million, both growing 10% with very healthy conversion.
Driving further into the quarter, we saw good growth across each of our service offerings. Residential revenues increased 6.3%, commercial pest control rose 9.9%, and our termite and ancillary services increased by 11.8%. Organic growth was also healthy across the portfolio, with growth of 5.4% in residential, 8.6% in commercial, and 11.1% in termite and ancillary services. Turning to profitability. Our gross margins were 54%, up 80 basis points versus last year. We continue to be positive on the price/cost equation. We realized improvements across several cost categories, with the most notable contributions coming from fleet and insurance and claims.
Quarterly adjusted SG&A costs as a percentage of revenue decreased by 60 basis points versus last year. While we saw improvements in insurance claims activity, we also saw leverage across several cost categories. We did see some leverage from customer acquisition costs in the quarter, but we continue to focus on driving demand for our services and expect to make additional investments in these areas during the third quarter. Second quarter GAAP operating income was $182 million, up approximately 18% year-over-year on 8.7% revenue growth. Operating margins were 20.4%, up 150 basis points year-over-year on strong gross margins and solid expense leverage.
Second quarter adjusted EBITDA was $210 million, up over 15% and representing a 23.6% margin. Margins were up 140 basis points versus last year and adjusted incremental EBITDA margins were approaching 40%, supported by benefits from more favorable claims activity as well as underlying leverage in more traditional operating expense categories. I'm pleased with the strong improvements in profitability in the quarter and for the first half of 2024. We delivered solid growth with an improving margin profile and remain focused on investing in our business and capturing growth in our very attractive end-markets.
The effective tax rate was approximately 26.1% in the quarter. Our ETR was 25.3% for the first half, and we expect this rate to approximate 26% for the year. Quarterly GAAP net income was $129 million or $0.27 per share, increasing approximately 23% from $0.22 per share in the same period a year ago. For the second quarter, we had non-GAAP pre-tax adjustments associated primarily with the FOX acquisition-related items, totaling approximately $4 million of pre-tax expense in the quarter.
Accounting for these expenses, adjusted net income for the quarter was $132 million or $0.27 per share, increasing over 17% and from the same period a year ago despite the higher level of interest costs. Speaking of interest costs, we expect a similar run rate in these costs for the second half relative to the first half. Turning to cash flow and the balance sheet, operating cash flow was $145 million, and we generated $136 million of free flow. This is slightly down versus last year, driven by working capital timing.
With that said, I'm pleased with the 10% growth in first half cash flow. Our business remains very well-positioned to continue to deliver healthy cash flow performance, enabling a balanced capital allocation strategy. Cash flow conversion, the percent of income that was converted into operating cash flow, was over 100% for the quarter as well for the first six months. We made acquisitions totaling $35 million, and we paid $73 million in dividends in the quarter. Debt-to-EBITDA leverage is well below one times on a gross and net level. Our balance sheet is very healthy, and it positions us well heading into the second half of the year.
In closing, our performance this quarter and throughout the first half of 2024 continues to demonstrate the strength of our business model and the engagement level of our team. We continue to focus on driving growth while executing on our continuous improvement and modernization initiatives. We are starting the second half with healthy organic demand, and we remain committed to investing in our people, and providing our customers with the best customer experience.
With that, I'll turn the call back over to Jerry.
